The short answer to whether or not you can buy your first home as a student is yes, you definitely can buy your first home while still in college. That might immediately lead you to ask how it can be done. While it may not be easy, it is certainly possible. Here are the basic steps you’ll need to take to buy your first home while still a college student.
Take care of college expenses.
When you are in college, you need to take care of your college expenses first to ensure you can finish your degree program. There are college counseling firms that will help you apply to college, maximize your financial aid options, and apply for scholarships. If you start while in high school, you can work with your consultant to ensure all or most of your college expenses are paid for through scholarships and financial aid grants. However, if you do still have tuition and other college expenses to cover, your college counselor can work with you to get federal student loans to cover the balance. The college admissions process can be frustrating and sometimes confusing, but a college counselor can simplify the process by helping college applicants fill out all correct paperwork and ensure it is submitted on time.
Look at your credit.
As soon as you turn 18, you should be working on getting and growing your credit score. When you try to get a mortgage loan, the lender will look at your credit score. Poor credit or no credit can mean you won’t get approved for a mortgage loan. You can start building credit by responsibly getting and using credit cards and getting a car loan.
Determine your budget.
Based on your income, you need to determine your house budget. If you are unsure how to figure that out, a lender can help you. Lenders have worksheets to determine how much you can afford each month for a mortgage payment and what that means for the total asking price over a 30-year mortgage. You can work with local mortgage brokers to figure out your budget and get the mortgage loan once you find your new home. When determining your budget, your brokers will consider how much you have set aside for a down payment, which will come off the top of the price.
Find the right home.
Once you have a budget, you can start looking at houses. Set your upper budget at a price point below what you were told you could afford. It is always better to go under budget than over budget. Buying a house is a significant investment, so take the time to find one that you’ll be happy in for a few years. Even if it isn’t intended to be your forever home, you’ll be living there for some time, and you want to be comfortable.
Once you find the house you want to buy, go back to the broker who helped you determine your budget and work with them to get the mortgage loan you need. There will be a lot of paperwork involved, and buying a house generally takes at least 30 days, so make sure you give yourself plenty of time before you need to move.
Buying a home while still in school is a significant investment. You’ll have a place to live at the same or lower monthly cost than renting, and when you are done, you’ll have equity in your home. You can sell your house and use the profit to buy your next house or pay off your student loans. If the house is close to campus, you may also decide to keep it as a rental property to make money off of the house when you move on.